Not So Happy Tuesday

Lots going on today and I'm off to a late start so let's dive right in.

First, let's talk about the price action today. After the surprising rally yesterday, I asked you to watch the Asia and London trade for clues to the Comex action today. What did we see? After a flat Asian session, the London Monkeys did their usual thing from about 2:00 am EDT on. The London Monkeys have now acted on 14 of the past 17 days. Check this chart from Ranting Andy:

The result was a giveback of more than half of yesterday's gains.

Why did we see this? Hard to say for sure but, with volume light ahead of the BLSBS later this week, I suspect that a lot of this was some Bullion Bank selling that was aimed at lessening some longs ahead of the CoT survey. No doubt the action since last Tuesday is a continuation of the trend of last week's report. Therefore, the banks tried today to lighten a few of the longs they had built up over the course of the week. This also serves the dual purpose of defending the 20-day MA and restoring some confidence to some of the shaky spec shorts. At any rate...we're down a modest $13 as I type. Let's see what tomorrow brings.

Speaking of the CoT, there has been some excellent analysis written in the past few days so I thought I would highlight some here. Again, the positioning of the Commericals vs The Specs has gotten so extreme that it has reached historic levels. Ultimately, how you interpret this depends upon just whom you think is really in charge. Is it The Specs or do The Cartel Banks lead The Specs by the nose into whichever position they would like? Let's start with longtime CoT-watcher Gene Arensberg: http://www.gotgoldreport.com/2013/05/gold-and-silver-disaggregated-cot-report-dcot-for-may-31.html

Still lots of talk out there about Fed QE "tapering". Again, I think is all silly and it may be a non-topic as soon as Friday at 8:31 am. Regardless, as mentioned last week, even if The Bernank was to announce some type of "taper", it would likely come from the $40B/month MBS-purchase side of the QE∞ equation. The Fed could still monetize $45B/month in treasuries directly while cutting the Primary Dealer kickbacklife supporthandoutwelfarebullshit MBS purchases to $20B/month. This would still be $65B/month in QE and silence all the hawks. Not saying that it will happen, just saying that even if it did, it's no big deal! $65B/month is still nearly $800B/year in fresh greenback, created from whole cloth for the purpose of sustaining The Great Ponzi. Read more at ZH: http://www.zerohedge.com/news/2013-06-04/chart-day-feds-taper-perspective And here's how it looks graphically:

Finally, I don't know if you've noticed but lately there sure have been a lot of big mines that have been taken off-line.

So, now, what to make of all this? Well, if you believe that everything is hunky-dory and that there are no supply issues in gold, then this is no big deal. After all, even though The Grasberg mine is the largest in the world, it still only produces about 30 metric tonnes per year or a little over 1% of all global mine production.

If, on the other hand, you think that the Bullion Banks are living hand-to-mouth and frantically trying to keep their Fractional Reserve Bullion Banking system alive, then it is a big deal. A very big deal.

That's a lot of gold...a lot of currently anticipated and expected supply that isn't coming. How much of this production was already sold forward into the market? And if it was already sold forward, what happens when it fails to materialize on schedule? Hmmmm. Could that lead to those contracts being covered? Could it lead to some new long purchasing as a hedge against supply delays, not only from the suppliers but from the end-users, as well? And with the current CoT structure in gold being akin to an overgrown and dried out California ravine just waiting for a spark...

Let's just leave it there for today. I hope that the rest of your Tuesday goes well and I look forward to seeing what tomorrow brings. Again, if I'm right about the cause of today's drop being Cartel CoT-positioning, then we should see a bit of a bounceback on the Globex and overnight.

171 Comments

I enjoyed your post about removing mine supply from this OTC bullion pricing mechanism...interestingly i met with Silver Wheaton yesterday and pressed them to stop passing all their silver 'credits' to bullion bankers but rather to find a way of 'rematerialising' those credits into physical and then into a securitised vehicle of some type so that they can remain price neutral on the metal while adding price pressure in the right rather than wrong direction. They were surprisingly receptive to the idea, were clear that something is awry agreeing that the Silver price is lower than it should be and the fact doesn't help anyone in the industry (either supply (them) or demand side(us)) to have bullion banks getting in the middle of the market and interfering with price discovery.

Rome wasn't built in a day, but I shall keep the pressure on them and keep reminding them of our conversation. Drip, dip. The penny really dropped with the boss when I stated that they alone could put the skids under the whole tinpot scheme - initially the comment was, 'well we're only 4% of annual supply' but when I extrapolated the meaning of that to a leveraged system they got the implications clearly. Being a streaming company and not reliant on banks to the same degree as the operators they have more motivation and less conflicts of interest that might otherwise impede their ability to get involved in the usurping of the LBMA.

Turd: Just an add to your list of mines out of production. I do think we can include South African mine production to your list. The union problems there are only getting worse and I'm sure production is significantly reduced.

Looks as the game is shortly coming to an end as always liars ALWAYS get caught. Some one, somewhere, that has leased or sold gold out that is not theirs is going to get caught and its going to be a game of musical chairs with a vast more number of people than the only chair.

red, to see China so accommodating last night to get the price lower, to help out the manipulator, who manage to push silver to three bottoms, on the crimex, suspected use of client money, for the push down, yeah screw the clients, and at those bottoms, suspected using in house money to buy it low, since they knew where it was going anyway, and as china drifts back up, during globex, while the manipulator traitorously unloads the booty bought for dump into china arms, and thus china gets the physical and the manipulator scores on the in house bottom line, while hanging clients out the dry, and echos of "sorry man", "tuff luck" is heard over the background CDMA signals, but physical is required to play that game, china only wants the real stuff, none of that paper stuff, but, how long will it last, so, how much physical remains in GLD and the Crimex anyway. Just asking. Got into Lemet, so can fish out those two memos, of days gone by, in LePatron and Rants threads, as mental refreshers.

As the wild chef pointed out above what if the comex put this out there and already has a scapegoat picked out who will take the fall for leasing out this gold that was not thiers. They will be punished and the comex deemed clean and trusted once again. Problem with musical chairs is that when someone gets kicked out of the game they remove another chair at the same time...but the music is so happy and festive. ;)

i can't get it to format right. received by e-mail. i have signed up for electronic delivery, so assume it also is being sent by mail. i thought the timing was a bit odd.

Because one or more products or account positions in your Fidelity account are eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits and why you should monitor your balances.

Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage per account owner, per depository institution. Certain holdings at Fidelity are eligible for “pass-through” FDIC insurance coverage subject to these same limits.

Eligible positions include:

•

Certificates of deposit (CDs) — Brokered CDs that are issued by an FDIC-insured institution

David Icke launched an appeal 4 days ago for funding towards a TV station.

I personally am not with him about some of the stuff he says, but he does speak the truth, in my experience, in many, many areas and has been doing a great job over the last 25 years or so in trying to wake people up to what's really going on. He's gone from mass-ridicule to where he is now, and has never wavered in his message. KUDOS.

Thanks for attempting to post a link so we could watch the show, but I received a msg that it was not available in my area. If you know of another way to post a link it would be appreciated. Sounded like an interesting show.

I have a guess about why they'd be sending this out. The Oversight Committee legislated by Dodd-Frank recently notified the non-bank institutions which they've chosen to call out as "Systemically Important Financial Institutions".

I'm guessing (only guessing, mind you) that Fidelity was fingered, and they're front-running the public relations materials to minimize any potential backlash.

Nothing is as it seems....I think we've realized that for awhile now. Consider the source of the numbers and why they might be misleading and why some things don't make sense at times when it appears they should.

Is it possible the numbers are intentionally misleading with many interpretations or variables purposely available and that they're based in a somewhat believable pattern? You bet.

Investor psychology comes into play here, no question. The urge in humans to want to recognize, believe or discern patterns can't be understated. TPTB know this.

He goes into a lot more detail, but I don't want to get into his proprietary elements.

The second perspective is that of my wife's father. We have been gradually helping he and my mother in law move over the past few weekends. They are in their 80s and moving from their lake home here in MN to a smaller one level living arrangement.

It came time to tackle his safe on Saturday when we discovered that it could not be easily moved on the hand truck unless emptied. We carefully helped him put his stack into separate boxes for the move. The sheer weight was impressive, not to mention the gleam in his eyes as we beheld his diligent efforts over at last four decades to protect his family from dollar devaluation. He holds his stack forever and is quite happy to pass it on to his children. This is the person who was talking in "turd parlance" before most of us here had any idea of what was going on or would have been able to fully comprehend what he was talking about. He advised me a few times to buy gold when it was under $300 an ounce. He is a die hard constitutional conservative and highly decorated US Air Force pilot, with a purple heart earned while flying helicopters in Viet Nam. Lets just say he is the ultimate salt of the earth Christian man and I admire him greatly.

The tale of the two views reveals stark differences, and I fell blessed to have regular influence from both sides. Both have been right at times during my lifetime, but the later view will ultimately be validated as a result of natural physical law, as well as from the assured outcome of the earthly battle we all are in contact with, yet may not be resolved to satisfaction within our lifetimes. So I think it wise to hedge both sides if you can swing it. If I had to choose one, I would pick the later perspective on principle alone. Personally I bend toward the latter, but due to realities of my father's estate, my own 401K and pension, I am in fact, somewhat ambivalently "dancing with the devil. "

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